[TECHNOLOGY]What to Expect FromArtificial IntelligenceTo understand how advances in artificial intelligenceare likely to change the workplace — and the work ofmanagers — you need to know where AI delivers themost value.

BY AJAY AGRAWAL, JOSHUA S. GANS, AND AVI GOLDFARB
Major technology companies uch as Apple, Google, and Amazon are prominently featuring artificial intelligence (AI) in their
product launches and acquiring AI-based startups. The flurry of interest in
AI is triggering a variety of reactions —
everything from excitement about how
the capabilities will augment human
labor to trepidation about how they will
eliminate jobs. In our view, the best way
to assess the impact of radical technological change is to ask a fundamental
question: How does the technology
reduce costs? Only then can we really
figure out how things might change.

To appreciate how useful this framing
can be, let’s review the rise of computer
technology through the same lens.
Moore’s law, the long-held view that the
number of transistors on an integrated
circuit doubles approximately every two
years, dominated information technology until just a few years ago. What did
the semiconductor revolution reduce the
cost of? In a word: arithmetic.

This answer may seem surprising
since computers have become so widespread. We use them to communicate, play games and music, design buildings, and even produce art.

But deep down, computers are souped-up calculators. That they appear to do more is testament to thepower of arithmetic. The link between computers and arithmetic was clear in the early days, whencomputers were primarily used for censuses and various military applications. Before semiconductors,“computers” were humans who were employed to do arithmetic problems. Digital computers madearithmetic inexpensive, which eventually resulted in thousands of new applications for everythingfrom data storage to wordprocessing to photography.AI presents a similar oppor-tunity: to make something thathas been comparatively expen-sive abundant and cheap. Thetask that AI makes abundantand inexpensive is prediction —in other words, the ability totake information you have andgenerate information you didn’tpreviously have. In this article,we will demonstrate how im-provement in AI is linked toadvances in prediction. We willexplore how AI can help us solveproblems that were not previ-ously prediction oriented, howthe value of some human skillswill rise while others fall, andwhat the implications are formanagers. Our speculations areinformed by how technologicalchange has affected the cost ofprevious tasks, allowing us toanticipate how AI may affectwhat workers and managers do.

Machine Learningand Prediction

The recent advances in AI
come under the rubric of
what’s known as “machine
learning,” which involves programming computers to learn
from example data or past
experience. Consider, for example, what it takes to identify
objects in a basket of groceries. If we could describe how
an apple looks, then we could
program a computer to recognize apples based on their
color and shape. However,
there are other objects that are
apple-like in both color and
shape. We could continue
encoding our knowledge of